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Waiter, There's a Service Charge On My Soup;
Making Sense Out of a Service Charge

By Stevenson Swanson, Chicago Tribune
Knight Ridder/Tribune Business News

Aug. 26, 2005--Waiter, there's a service charge on my soup.

Customers at a high-end Manhattan restaurant soon will notice an extra expense when they get their bill, and not only for their soup course.

Beginning Thursday, chef Thomas Keller will charge customers a 20 percent service fee at Per Se, his year-old outpost in the Time Warner Center on Columbus Circle, where the views of Central Park are nearly as breathtaking as the prices.

The service charge is intended to take the place of the customary tip, whose amount is left to the discretion of the diner as a way to reward attentive service.

Keller's announcement has set the food world abuzz. Although service charges for large parties are common, only a handful of restaurants around the country impose such charges on all diners.

Keller's high profile as one of the country's leading toques guarantees that the new policy will be noticed, but it is also the size of the charge, a full one-fifth of the total bill, that is drawing attention. Service fees at other restaurants, including Charlie Trotter's in Chicago, hover in the high teens for small parties.

Keller is not trying to make up for stingy patrons. The average tip at Per Se is 22 percent, well above the national average of 18.6 percent. Instead, the move is intended to reduce the wide disparity in pay between the service staff, such as waiters, wine stewards and busboys, and the sweltering souls who labor in the kitchen.

Or, as a statement from the restaurant put it, the service charge will "further the establishment of a unified work culture within the restaurant."

As in most restaurants, the front-of-the-house staff at Per Se currently pools all of the tips, while the cooks and other kitchen personnel work for hourly wages.

The restaurant says it is becoming hard for young chefs in high-priced New York to live on a salary the restaurant can afford. One of Keller's cooks has quit and another asked to become a waiter temporarily to earn enough to pay his bills.

At the most exclusive New York restaurants, servers and others out front can make $75,000 or more a year, while the kitchen staff might have to settle for $30,000, according to Bill Guilfoyle, an associate professor at the Culinary Institute of America in Hyde Park, N.Y., who has worked at and run several New York restaurants.

Under the new system at Per Se, everyone will be paid hourly wages. That could mean a pay cut for waiters, but the restaurant's management says it will probably boost the wage rate for some staffers.

"It's the gratuities or, as in Europe, the service charges, that truly support the staff," said Eric Lilavois, the restaurant's director of operations. "We feel strongly that this change will be a benefit for every member of our team."

Keller, whose French Laundry restaurant in California's Napa Valley routinely tops listings of the country's ultimate dining destinations, has received swooning reviews for Per Se, which has only 15 highly sought-after tables and charges a flat $175 per person for a five-course dinner.

Among the offerings on the ever-changing menu is a typically wry version of bacon and eggs, made of bits of braised pig's head and quail eggs. Dessert might feature thyme-infused ice cream or cucumber sorbet.

The origin of tipping is lost in the mists of dinners long past, according to Michael Lynn, a professor at the Cornell University School of Hotel Administration. One theory posits that the practice originated in the taverns of 17th Century England, where tipplers would offer waiters a coin wrapped in paper, on which "TIP" had been written, standing for "to insure promptitude."

Over time, service charges became the norm in Europe. But in the U.S., such charges are common only for large groups, such as parties of eight or more. For smaller groups, tipping is by far the standard.

Among the exceptions is Chez Panisse, the Berkeley, Calif., restaurant that popularized the use of organic, locally grown ingredients. Owner Alice Waters instituted a mandatory service charge 16 years ago. The fee, recently increased, is 17 percent. Keller's French Laundry has had a service charge, currently 19 percent, for more than seven years.

Among top-tier Chicago restaurants, Charlie Trotter's has an 18 percent service charge for parties of six or fewer and 20 percent for parties of seven or more. Tru has no service charge for parties of six or fewer, but a 20 percent charge kicks in for groups of seven or more.

Customer surveys have found that diners overwhelmingly prefer to determine their own tips. In a poll by the Zagat series of dining guides last year, 70 percent of patrons favored tipping over a service charge.

But the notion that customers will punish waiters for water glasses that go unfilled or main courses that are slow to arrive is exaggerated.

"Yes, people do tip more for good service, but they don't tip that much more," said Lynn, who has studied tipping behavior extensively. "Literally, the weather outside has as much of an influence on tipping as does the level of service."

Although the service charge is the topic du jour of New York's restaurant scene, the Culinary Institute's Guilfoyle doubts that other eateries will follow suit. At less expensive restaurants, the disparity in take-home pay between waiters and cooks is not as great as at four-star establishments.

And there's the thorny question of asking waiters to give up tips in return for a portion of the service charge, which likely would reduce their income. Keller said in his statement that waiters at the French Laundry were worried when the service charge was introduced there, but "ultimately, the system proved instrumental in fostering an undeniably unified restaurant staff."

The service charge has merit, Guilfoyle readily concedes.

"It's kind of like screw-top wine bottles," he said. "They make a lot of sense, but culturally it's going to be a hard sell."


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